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Pre-Tender Offer Share Acquisition Strategy in Takeovers
Bhagwan Chowdhry and Narasimhan Jegadeesh
The Journal of Financial and Quantitative Analysis
Vol. 29, No. 1 (Mar., 1994), pp. 117-129
Published by: Cambridge University Press on behalf of the University of Washington School of Business Administration
Stable URL: http://www.jstor.org/stable/2331194
Page Count: 13
You can always find the topics here!Topics: Tender offers, Shareholders, Acquired shares, Empirical evidence, Open markets, Free rider effect, Financial economics, Quantitative analysis, Bidding, Market prices
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This paper models the strategic pre-tender offer share acquisition problem faced by potential bidders in takeovers. The model provides a rational explanation for the seemingly anomalous empirical evidence that the information about the impending tender offers is not fully conveyed through the potential bidders' pre-tender offer trades and for the evidence that a large fraction of bidders do not hold any target shares prior to launching the tender offers. Additional testable implications are also provided.
The Journal of Financial and Quantitative Analysis © 1994 University of Washington School of Business Administration